Communications as a Service (CaaS) Industry News

TMCNet:  AudioCodes Reports Second Quarter 2017 Results

[July 26, 2017]

AudioCodes Reports Second Quarter 2017 Results

LOD, Israel, July 26, 2017 /PRNewswire/ --

Second Quarter Highlights:

  • Quarterly revenues increased by 8.0% year-over-year to $38.7 million;
  • Quarterly service revenues increased by 13.8% year-over-year to $11.8 million;
  • Quarterly UC-SIP revenues increased more than 15% year-over-year;
  • Quarterly GAAP gross margin was 61.4%, quarterly Non-GAAP gross margin was 61.9%;
  • Quarterly GAAP operating margin was 4.8%, Quarterly Non-GAAP operating margin was 6.9%;
  • Quarterly cash flow from operating activities was $2.4 million;
  • Quarterly GAAP net income was $1.0 million, or $0.03 per diluted share, compared to $721,000, or 0.02 per diluted share, in the prior year period;
  • Quarterly Non-GAAP net income was $2.5 million, or $0.08 per diluted share, compared to $2.4 million, or $0.06 per diluted share, in the prior year period; and
  • AudioCodes repurchased 438,000 of its ordinary shares during the quarter at an aggregate cost of $2.9 million.

Details:

AudioCodes (Nasdaq: AUDC), a leading provider of voice networking solutions that enable enterprises and service providers to transition to all-IP voice networks, today announced financial results for the second quarter ended June 30, 2017.

Revenues for the second quarter of 2017 were $38.7 million, compared to $37.4 million for the first quarter of 2017 and $35.9 million for the second quarter of 2016.

Net income was $1.0 million, or $0.03 per diluted share, for the second quarter of 2017, compared to $721,000, or $0.02 per diluted share, for the second quarter of 2016.

On a Non-GAAP basis, the Company reported quarterly net income of $2.5 million, or $0.08 per diluted share, compared to $2.4 million, or $0.06 per diluted share, in the second quarter of 2016.

Non-GAAP net income excludes: (i) stock-based compensation expenses; (ii) amortization expenses related to intangible assets; (iii) expenses related to deferred payments in connection with the acquisition of Active Communications Europe and (iv) non-cash deferred tax benefit or expenses. A reconciliation of net income on a GAAP basis to a non-GAAP basis is provided in the tables that accompany the condensed consolidated financial statements contained in this press release.

Net cash provided by operating activities for the second quarter of 2017 totaled $2.4 million. Cash and cash equivalents, long- and short-term bank deposits and long- and short-term marketable securities were $61.2 million as of June 30, 2017, compared to $78.1 million as of June 30, 2016. The decrease in cash and cash equivalents, long and short-term bank deposits and long and short-term marketable securities was the result of the use of cash for the continued repurchasing of the Company's ordinary shares pursuant to its share repurchase programs.

"We are pleased to report solid financial results for the second quarter of 2017 as we continued to deliver steady growth, and further executed on our strategic plan to grow our UC-SIP business," said Shabtai Adlersberg, President and Chief Executive Officer of AudioCodes. "UC-SIP revenues increased in the first half of 2017 more than 15% compared to the same period in 2016. Strength in this area of the business is driven primarily by collaborating with our application and system integration partners worldwide and through winning enterprise voice deployments on a global basis."

"As expected, All-IP network transformation project activity maintained its momentum, contributing again to improved gateway revenues this quarter. We remain focused on strengthening our strategic partnerships with industry leaders in the Microsoft Skype for business, the UCaaS, contact centers and business services markets. As a reflection of our confidence in our business, in May, we obtained authorization to purchase up to an additional $15 million  of our ordinary shares pursuant to our repurchase program," concluded Mr. Adlersberg.

Share Buy Back Program

During the quarter ended June 30, 2017, AudioCodes acquired 438,000 of its ordinary shares under its share repurchase program for a total consideration of approximately $2.9 million. As of June 30, 2017, AudioCodes had acquired an aggregate of 13.6 million of its ordinary shares since August 2014 for an aggregate consideration of approximately $64.4 million.

In May 2017, AudioCodes received court approval in Israel to purchase up to an aggregate of $15 million of additional ordinary shares pursuant to its share repurchase program. As of June 30, 2017, $12.1 million remained available to the Company for repurchasing shares under this court approval. The current court approval for share repurchases will expire on November 15, 2017.

Conference Call & Web Cast Information

AudioCodes will conduct a conference call at 8:00 A.M., Eastern Time today to discuss the Company's second quarter operating performance, financial results and outlook. Interested parties may participate in the conference call by dialing one the following numbers:

United States Participants: +1 (877) 407-0778

International Participants: +1 (201) 689-8565

The conference call will also be simultaneously webcast. Investors are invited to listen to the call live via webcast at the AudioCodes investor website at http://www.audiocodes.com/investors-lobby.

Follow AudioCodes' social media channels: 

AudioCodes invites you to join our online community and follow us on: AudioCodes Voice Blog, LinkedIn, Twitter, Facebook, and YouTube.

To download AudioCodes' investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, please visit Apple's App Store for the iPhone and iPad or Google Play for Android mobile devices.

About AudioCodes

AudioCodes Ltd. (NASDAQ, TASE: AUDC) designs, develops and sells advanced Voice-over-IP (VoIP) and converged VoIP and Data networking products and applications to Service Providers and Enterprises. AudioCodes is a VoIP technology market leader, focused on converged VoIP and data communications, and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable. The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Routers, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers, Value Added Applications and Professional Services. AudioCodes' underlying technology, VoIPerfectHD™, relies on AudioCodes' leadership in DSP, voice coding and voice processing technologies. AudioCodes' High Definition (HD) VoIP technologies and products provide enhanced intelligibility and a better end user communication experience in Voice communications. For more information on AudioCodes, visit http://www.audiocodes.com.

Statements concerning AudioCodes' business outlook or future economic performance; product introductions and plans and objectives related thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are "forward-looking statements'' as that term is defined under U.S. Federal securities laws. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to: the effect of global economic conditions in general and conditions in AudioCodes' industry and target markets in particular; shifts in supply and demand; market acceptance of new products and the demand for existing products; the impact of competitive products and pricing on AudioCodes' and its customers' products and markets; timely product and technology development, upgrades and the ability to manage changes in market conditions as needed; possible need for additional financing; the ability to satisfy covenants in the Company's loan agreements; possible disruptions from acquisitions; the ability of AudioCodes to successfully integrate the products and operations of acquired companies into AudioCodes' business; and other factors detailed in AudioCodes' filings with the U.S. Securities and Exchange Commission. AudioCodes assumes no obligation to update the information in this release.

©2017 AudioCodes Ltd. All rights reserved. AudioCodes, AC, HD VoIP, HD VoIP Sounds Better, IPmedia, Mediant, MediaPack, What's Inside Matters, OSN, SmartTAP, User Management Pack, VMAS, VoIPerfect, VoIPerfectHD, Your Gateway To VoIP, 3GX, VocaNom, AudioCodes One Voice and CloudBond are trademarks or registered trademarks of AudioCodes Limited. All other products or trademarks are property of their respective owners. Product specifications are subject to change without notice.


 

 

 



AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands



June 30,


December 31,


2017


2016


(Unaudited)


(Audited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$ 18,120


$ 24,344

Short-term and restricted bank deposits

3,066


3,401

Short-term marketable securities and accrued interest

7,590


6,778

Trade receivables, net

25,557


25,448

Other receivables and prepaid expenses

7,983


3,377

Inventories

15,943


16,333

Total current assets

78,259


79,681





LONG-TERM ASSETS:




Long-term and restricted bank deposits

$ 4,813


$ 5,407

Long-term marketable securities

27,636


29,540

Deferred tax assets

10,431


11,607

Severance pay funds

20,169


17,820

Total long-term assets

63,049


64,374





PROPERTY AND EQUIPMENT, NET

3,671


3,867





GOODWILL, INTANGIBLE ASSETS AND OTHER, NET

38,636


39,054





Total assets

$ 183,615


$ 186,976





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term bank loans

$ 2,806


$ 3,451

Trade payables

5,009


7,710

Other payables and accrued expenses

20,531


18,618

Deferred revenues

17,131


14,951

Total current liabilities

45,477


44,730





LONG-TERM LIABILITIES:




Accrued severance pay

$ 21,238


$ 18,941

Long-term bank loans

7,410


8,493

Deferred revenues and other liabilities

5,503


6,153

Total long-term liabilities

34,151


33,587





Total equity

103,987


108,659

Total liabilities and equity

$ 183,615


$ 186,976

 

 


AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except share and per share data



 Six months ended


Three months ended


 June 30,


June 30,


2017


2016


2017


2016


(Unaudited)


(Unaudited)

Revenues:








Products

$ 52,928


$ 50,016


$ 26,920


$ 25,482

Services

23,185


20,609


11,816


10,383

Total Revenues

$ 76,113


70,625


$ 38,736


35,865

Cost of revenues:








Products

23,332


22,854


12,173


11,574

Services

5,667


5,114


2,765


2,600

Total Cost of revenues

28,999


27,968


14,938


14,174

Gross profit

47,114


42,657


23,798


21,691

Operating expenses:








Research and development, net

14,536


14,161


7,382


7,296

Selling and marketing

24,398


22,197


12,363


11,063

General and administrative

4,361


4,100


2,200


1,995

Total operating expenses

43,295


40,458


21,945


20,354

Operating income

3,819


2,199


1,853


1,337

Financial income (expenses), net

(103)


(26)


(34)


96

Income before taxes on income

3,716


2,173


1,819


1,433

Income tax expense, net

(1,407)


(1,674)


(805)


(712)

Net income

$ 2,309


$ 499


$ 1,014


$ 721

Basic net earnings per share

$ 0.07


$ 0.01


$ 0.03


$ 0.02

Diluted net earnings per share

$ 0.07


$ 0.01


$ 0.03


$ 0.02

Weighted average number of shares used in
computing basic net earnings per share
(in thousands)

31,791


36,882


31,596


36,490

Weighted average number of shares used in
computing diluted net earnings per share
(in thousands)

32,822


37,321


32,608


36,927

 

 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

U.S. dollars in thousands, except share and per share data



Six months ended


Three months ended


June 30,


June 30,


2017


2016


2017


2016


(Unaudited)


(Unaudited)

GAAP net income

$ 2,309


$ 499


$ 1,014


$ 721

GAAP net earnings per share

$ 0.07


$ 0.01


$ 0.03


$ 0.02

Cost of revenues:








Stock-based compensation (1)

42


55


17


30

Amortization expenses (2)

348


632


174


316


390


687


191


346

Research and development, net:








Stock-based compensation (1)

181


228


86


117

Deferred payments expenses (3)

74


376


63


188


255


604


149


305

Selling and marketing:








Stock-based compensation (1)

540


559


277


282

Amortization expenses (2)

60


60


30


30


600


619


307


312

General and administrative:








Stock-based compensation (1)

346


360


191


183

Income taxes:








Deferred tax (4)

1,064


1,176


634


518

Non-GAAP net income

$ 4,964


$ 3,945


$ 2,486


$2,385

Non-GAAP diluted net earnings per share

$ 0.15


$ 0.10


$ 0.08


$ 0.06









(1) Stock-based compensation expenses related to options and restricted stock units granted to employees and others.

(2) Excluding amortization of intangible assets related to the acquisitions of Netrake, Mailvision and Active Communications Europe assets.

(3) Excluding expenses related to deferred payments in connection with the acquisition of Active Communications Europe.

(4) Non-cash deferred tax expenses.


Note: Non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. The Company believes that non-GAAP information is useful because it can enhance the understanding of its ongoing economic performance and therefore uses this non-GAAP information internally to evaluate and manage its operations. The Company has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results and because many comparable companies report this type of information.


 

AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Six months ended


Three months ended



June 30,


June 30,



2017


2016


2017


2016



(Unaudited)


(Unaudited)

Cash flows from operating activities:









Net income


$ 2,309


$ 499


$ 1,014


$ 721

Adjustments required to reconcile net income to net cash provided by operating activities:









Depreciation and amortization


1,260


1,550


605


781

Amortization of marketable securities premiums and accretion of discounts, net


329


490


168


221

Increase (decrease) in accrued severance pay, net


(52)


480


(248)


12

Stock-based compensation expenses


1,109


1,202


571


612

Decrease in accrued interest and exchange rate effect of loans, marketable securities and bank deposits


215


230


218


201

Decrease in long- term deferred tax assets


1,022


1,218


613


539

Decrease (increase) in trade receivables, net


(109)


3,403


(1,165)


496

Decrease (increase) in other receivables and prepaid expenses


(4,187)


(59)


(729)


2,570

Increase in inventories


390


1,753


497


1,855

Decrease in trade payables


(2,701)


(2,181)


(137)


(2,941)

Increase in other payables and accrued expenses


1,657


265


1,711


942

Increase (decrease) in deferred revenues


1,969


(633)


(761)


(508)

Net cash provided by operating activities


3,211


8,217


2,357


5,501

Cash flows from investing activities:









Proceeds from sale of marketable securities


-


12,429


-


12,429

Decrease (increase) in short-term deposits, net


335


(11,779)


621


(12,207)

Decrease in long-term bank deposits


600


327


300


150

Proceeds from redemption of marketable securities


850


900


850


-

Purchase of property and equipment


(646)


(822)


(183)


(361)

Net cash provided by investing activities


1,139


1,055


1,588


11



















 


 AUDIOCODES LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands




Six months ended


Three months ended



June 30,


June 30,



2017


2016


2017


2016



(Unaudited)


(Unaudited)

Cash flows from financing activities:









Purchase of treasury stock


(10,182)


(6,726)


(2,850)


(1,805)

Repayment of bank loans


(1,925)


(2,979)


(940)


(1,687)

Consideration related to payment for acquisition of Mailvision


-


(233)


-


(233)

Proceeds from issuance of shares upon exercise of options and warrants


1,533


219


247


96

Net cash used in financing activities


(10,574)


(9,719)


(3,543)


(3,629)










Increase (decrease) in cash and cash equivalents


(6,224)


(447)


402


1,883

Cash and cash equivalents at the beginning of the period


24,344


18,908


17,718


16,578

Cash and cash equivalents at the end of the period


$ 18,120


$ 18,461


$ 18,120


$ 18,461

 

Company Contacts


IR Agency Contact

Niran Baruch

Shirley Nakar

Philip Carlson

VP Finance & Chief Financial Officer

Director, Investor Relations

KCSA Strategic Communications

AudioCodes

AudioCodes

Tel: +1-212-896-1233

Tel: +972-3-976-4000

Tel: +972-3-976-4000

audc@kcsa.com

niran.baruch@audiocodes.com

shirley@audiocodes.com


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SOURCE AudioCodes Ltd.


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